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- Sep 25, 2007
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Hi all,And a third article from the April 27th issue of Canadian Business magazine. Excerpts:As those in the industry contemplate the possibility of peaking conventional oil, the new Suncor, a super major with a massive reserve base and all the cash it needs to fund further oilsands expansion as a result of the deal, is set to fly the Canadian flag as Petro-Canada was once supposed to.
Language in the merger suggests the newly created operation will press the government to roll back the restrictions of the Petro-Canada Public Participation Act, which precludes any company from buying more than 20%. (Suncor argues the "amalgamation" does not contravene the law.) But what is even clearer is that the unconventional oilsands now trump conventional production. Suncor will get Petro-Canada, and Albertans will win a long tug-of-war.
For now, it`s all business in a reinvigorated Calgary, a time to move on and focus on the next phase of the oil age, the era of unconventional oil — and how Canada will fit into it.
As the world burns through its remaining conventional oil, big international players are flocking to the patch of frozen muskeg north of Fort McMurray, now widely viewed as the largest source of politically stable, investable oil on the planet.
So the oilsands are widely viewed as the last big prize.
And so, as the age of unconventional oil takes shape, Suncor is well positioned with its Petro-Canada merger.
Many analysts say that while the merger diversifies Suncor away from the oilsands in the short term, what the company has really done is bulk up its cash flow. The deal ensures that it will have more than enough money (and Syrian and Libyan assets to shed) to fund projects that have been put on hold as a result of the sharp drop in the price of crude. In other words, it has set itself up to fund the next stage of oilsands expansion. "Things have changed, and they`ve changed quickly," says George. "At the top, everyone was talking about $200 and now they`re talking about $20. So it`s still a cyclical industry."
But for George, the downturn is all in a day`s work. "I call it the flushing out," he says. "It takes out the over-leveraged, the weak, the lame and the sick. And that`s a good thing. It always happens. And it is necessary." When prices come back, Suncor is well-positioned. With Petro-Canada`s conventional-oil-aided cash flow in its pocket — a strong $6.5 billion in financial firepower — it is set to come running out of the gate.
That the world is moving into a new era seems assured.
Just a few years ago, peak oil was relegated to the fringes of the oil industry. But it quickly seems to be gaining greater acceptance, at least among the people gathered here today. As the fund managers sip coffee and water, Thomas Petrie, a vice-chairman of Merrill Lynch, approaches the microphone to give his presentation. "What I don`t understand is why people are still debating the idea of peak oil," he tells the crowd.
I think we`re over the worst," George tells the crowd, referring to the price of oil. "We might re-test $40, but I think that`s it. We`ll be heading back up. It`s not `if,` it`s `when.`"
http://www.canadianbusiness.com/markets/co...427_16705_16705
Keith
Language in the merger suggests the newly created operation will press the government to roll back the restrictions of the Petro-Canada Public Participation Act, which precludes any company from buying more than 20%. (Suncor argues the "amalgamation" does not contravene the law.) But what is even clearer is that the unconventional oilsands now trump conventional production. Suncor will get Petro-Canada, and Albertans will win a long tug-of-war.
For now, it`s all business in a reinvigorated Calgary, a time to move on and focus on the next phase of the oil age, the era of unconventional oil — and how Canada will fit into it.
As the world burns through its remaining conventional oil, big international players are flocking to the patch of frozen muskeg north of Fort McMurray, now widely viewed as the largest source of politically stable, investable oil on the planet.
So the oilsands are widely viewed as the last big prize.
And so, as the age of unconventional oil takes shape, Suncor is well positioned with its Petro-Canada merger.
Many analysts say that while the merger diversifies Suncor away from the oilsands in the short term, what the company has really done is bulk up its cash flow. The deal ensures that it will have more than enough money (and Syrian and Libyan assets to shed) to fund projects that have been put on hold as a result of the sharp drop in the price of crude. In other words, it has set itself up to fund the next stage of oilsands expansion. "Things have changed, and they`ve changed quickly," says George. "At the top, everyone was talking about $200 and now they`re talking about $20. So it`s still a cyclical industry."
But for George, the downturn is all in a day`s work. "I call it the flushing out," he says. "It takes out the over-leveraged, the weak, the lame and the sick. And that`s a good thing. It always happens. And it is necessary." When prices come back, Suncor is well-positioned. With Petro-Canada`s conventional-oil-aided cash flow in its pocket — a strong $6.5 billion in financial firepower — it is set to come running out of the gate.
That the world is moving into a new era seems assured.
Just a few years ago, peak oil was relegated to the fringes of the oil industry. But it quickly seems to be gaining greater acceptance, at least among the people gathered here today. As the fund managers sip coffee and water, Thomas Petrie, a vice-chairman of Merrill Lynch, approaches the microphone to give his presentation. "What I don`t understand is why people are still debating the idea of peak oil," he tells the crowd.
I think we`re over the worst," George tells the crowd, referring to the price of oil. "We might re-test $40, but I think that`s it. We`ll be heading back up. It`s not `if,` it`s `when.`"
http://www.canadianbusiness.com/markets/co...427_16705_16705
Keith